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Your company has been trying to survive during this downturn in the economy. You are the manager of a call center that provides customer service to customers who have purchased an alarm system from your company. The customer service representatives answer basic problems from customers related to the use of the alarm system and some billing issues. Your department has nothing to do with sales, installation, or monitoring of the alarm system. You currently have 10 customer service representatives on staff. Your budget lines for these 10 sales representatives look as follows for the coming year:

Salaries $ 600,000
Commissions $ 300,000
Benefits $ 200,000
Travel $ 100,000
Other Direct Costs $ 50,000
Department Overhead $ 150,000
Total Department Costs $1,400,000

You have been asked to reduce your department budget by $100,000 next year. Assume that Salaries, Benefits, Travel and Other Direct Costs will decrease proportionally with the elimination of a customer service representative. You believe that 9 customer service representative s can cover the current customer base, but worry that as new customers are signed up, service will diminish overall. Use the decision model below and answer the problems. Feel free to rely on your current or past job experience for the context of your decision.

Formulate a written statement as to the problem you are trying to solve.

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